A container is off loaded from a ship at the Port of Los Angeles in San Pedro. The twin ports of Los Angeles and Long Beach are both doing upgrades in an effort to retain business that could get diverted as a result of the widening of the Panama Canal, which is expected to be completed in 2015.
ROBYN BECK/AFP/Getty Images

Fifty-five to 60 percent of all the containers that move through Southern California’s ports are coming from or going to China and Hong Kong.
Stephen Carr — Staff photographer

International trade has long played a major role in California’s economy, but increasing competition from other ports in the U.S., Canada and Mexico threaten to erode some of that business.

And there’s a lot of business at stake.

Most of California’s import/export activity occurs at the ports of Los Angeles and Long Beach. In fact, more than 40 percent of the nation’s water-borne cargo moves through those twin ports. California ranks as the second largest exporting state in the nation, according to a report from the Los Angeles County Economic Development Corp.

But growth slowed considerably in 2012 to 3.5 percent, compared with double-digit gains during the previous two years. Statistics from the Port of Long Beach, the nation’s second busiest port, show a significant decline in cargo movement over the past five years.

In 2006 the port handled 85 million metric tons of cargo. The following year that rose to 87 million metric tons. But it dropped to 80 million in 2008 and further declined to 75 million in 2011, according to the port’s website.

Port of Long Beach spokesman Art Wong said cargo movement through the two ports was essentially flat in 2011 and 2012, although it ramped up during the second half of 2013.

“Overall the two ports will see a gain of about 4 percent in imports and 1 percent in exports for 2013,” he said. “Based on what we’ve seen we’re pretty hopeful that we can sustain our recent gains and maybe carry that forward.”

Port of Los Angeles spokesman Phillip Sanfield said cargo traffic there was off 3.6 percent in 2013, although November was a good month.

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“We had a really strong November,” he said. “We were up 17 percent for the month. And we’ll be forming some alliances with the shipping lanes, so we hope to get some of the traffic back that we lost in 2013. We’re forecasting growth of 2 to 4 percent for 2014.”

Crude oil, electronic products and furniture are among the two ports’ top imports, while chemicals, wastepaper, scrap metal and foods are some of the top exports.

Some business leaders fear the expansion of the Panama Canal could divert traffic away from Southland ports and threaten much-needed jobs in Southern California and beyond. Trade through the ports of L.A. and Long Beach supports about 800,000 jobs throughout California, according to Wong.

The widening of the Panama Canal will allow the channel to take on bigger ships. More importantly, it will make ports in the southern and eastern United States more desirable to Asian shippers.

In the face of that expansion — which is scheduled to be completed in 2015 — Southern California ports have already made significant upgrades to streamline and speed the flow of goods moving to and from their facilities.

“The Port of Long Beach is in the process of upgrading terminals,” Wong said. “We already did one and we’re in the middle of another one. We’re doing $4 billion worth of improvements. We’re doing what we can to increase productivity to handle bigger ships and have a smaller environmental impact.”

Sanfield said the Port of Los Angeles is in the early stages of a five-year, $1.2 billion capital improvement program.

“We have to make sure we have the best infrastructure in North America,” he said. “The competition is very intense now. We’re not only facing competition from the Panama Canal, but also from Canada.”

Some cargo could end up being diverted to other ports, Sanfield said, but in many cases that wouldn’t make sense.

“Cargo shipped by sea from Shanghai to New York takes 26 days to arrive,” he said. “Then it takes another five days to get to Chicago by rail, so that’s a total of 31 days. But going from Shanghai to L.A. is just 13 days by sea and another five by rail to Chicago. So you’re looking at 18 days versus 31 days.”

The Los Angeles Customs District — led by the ports of L.A. and Long Beach and Los Angeles International Airport — grew by 4.3 percent to $403.9 billion in 2012, making it the first and only U.S. customs district to surpass $400 billion in total imports and exports in a single year.

Ferdinando Guerra, an international economist with the LAEDC, said things are looking up at the ports.

“I think we are doing well,” he said. “On the import side we saw stronger than expected growth in the August-through-October period. And it was strong on the export side too, which is a very positive thing. It wasn’t as strong as we were hoping for in 2013, but we’re encouraged that things are starting to turn around.”

The Commerce Department reported that retail sales — excluding automobiles, gasoline, building materials and food services — increased 0.7 percent in December after a 0.2 percent rise in November.

Guerra said 55 to 60 percent of all the containers that move through Southern California’s ports are coming from or going to China and Hong Kong.

“Another 20 percent of the business comes from Japan, Korea and Taiwan,” he said.